Klarna mulling fresh fundraise at much lower valuation
Buy now, pay later lender Klarna Bank is mulling a fresh fundraise at a much lower value than what it achieved last year, it was reported on Friday.
According to the Wall Street Journal, the Swedish company was in discussions with investors over a funding deal that could see it raise $500m at a value of $15bn (£12.17bn).
That would be a significant fall from reports last month that it was looking to raise $1bn at a value of $30bn, and a major slide from the SoftBank-led investment last June, which made Klarna the most valuable fintech startup in Europe at a $45.6bn value.
Klarna’s value skyrocketed over the Covid-19 pandemic, from an estimated $3.5bn in 2019, as consumers stayed home and online shopping went through the roof.
The company processed $80bn worth of transactions in 2021, which was up 42% year-on-year, although an environment of rising interest rates and tightening belts has seen its losses begin to mount recently.
It recorded a loss of SEK 2.57bn (£0.21bn) in the first quarter, a year-on-year quadrupling, and last month it warned it could sack up to 10% of its staff amid a “volatile” economy.
The burgeoning buy-now-pay-later sector is facing wider pressures as well, with Klarna’s US-traded competitor Affirm down more than 80% on Nasdaq for the year to date.
Such companies are also facing increasing competition from more established rivals, with both PayPal and Barclays launching their own versions of the service, and Apple set to bring a buy-now-pay-later option to the US later in the year.
The firms are also coming under increasing regulatory scrutiny, over concerns they are attracting younger consumers who might not fully understand how such credit works, and end up digging themselves into a lending hole.
Reporting by Josh White at Sharecast.com.